The dollar index traded near 108.83 in early Asian trading on Wednesday (August 31), Beijing time; the dollar edged higher on Tuesday, below the 20-year high set a day ago, while the euro returned above parity as the market priced on the Fed and the European Central Bank's extra-large interest rate hike forecast. Gold prices fell, and investors prepared for the U.S. and other regions to be in a state of high interest rates for some time; Crude plunged nearly 5 percent, its biggest drop in about a month, with fears that fuel demand could weaken as global central banks raise interest rates to combat rising inflation, and the turmoil in Iraq has failed to weaken the country's crude exports.
Commodity close: Brent's October crude futures closed down 5.5 percent at $99.31 a barrel after hitting an intraday low of $97.55 a barrel. The October contract expired on Wednesday and the more actively traded November Brent crude futures traded at $97.84 a barrel, down 4.9 percent. U.S. crude futures closed down 5.54 percent at $91.64 a barrel, while U.S. futures fell 0.8 percent at $1,736.3.
U.S. stocks closed: The Dow Jones Industrial Index fell 0.96% to 31790.87 points; the S&P 500 index fell 1.10% to 3986.16 points; the Nasdaq index fell 1.12% to 11883.14 points.
Wednesday Preview
At 20:00 Cleveland Fed President Mestre speaks on the U.S. economic outlook.
Global markets at a glance
U.S. stocks closed lower for the third straight session on Tuesday, with rising U.S. job openings adding to fears that the Fed has further reasons to maintain its aggressive interest rate hike path to fight inflation. The S&P 500 has plunged more than 5 percent since Fed Chairman Jerome Powell reiterated his determination to raise rates even in the face of a slowdown on Friday.
Labor demand showed no signs of cooling, with U.S. job openings rising to 11.239 million in July and the previous month's data being sharply revised. Another report showed that consumer confidence rebounded strongly in August after three consecutive months of declines.
Ken Porcari, managing partner at Kace CapitalAdvisors, said, "They have to weaken the labor market, what to do, to raise interest rates, to make things so expensive that people will back off, demand will go down, people will be fired, and the data gives them further justification." "The above figures have increased concern about the August non-farm payrolls report, which will be released on Friday.
Williams, chairman of the Federal Reserve Bank of New York, said Tuesday that the Fed may need to raise its policy rate above 3.5 percent and that a rate cut is unlikely next year because it will have to fight excessive inflation.
Still, Atlanta Fed President Bostic said in an article published Tuesday that if new data showed a "noticeable" slowdown in inflation, the Fed might have reason to cut back the 75 basis point hike. Richmond Fed President Barkin said the Fed's commitment to raise interest rates to push inflation back to its target level of 2 percent would not necessarily lead to a serious recession but would bring some benefits. Traders see a 74.5% chance of a third consecutive 75 basis point rate hike by the Fed at its September meeting.
Eleven sectors of the S&P 500 closed lower, with the energy sector down 3.36 percent, the largest percentage decline, as crude oil settlement prices fell more than 5 percent for fears that a global economic slowdown could weaken demand. Large interest rate-sensitive growth and technology stocks fell, with Microsoft down 0.85 percent and Apple down 1.53 percent, the biggest drag on the benchmark stock index.
Both the S&P 500 and the NASDAQ have fallen below the 50-day moving average, and the former briefly broke below the 50% Fibonacci retracement level from the June low to the August high, another key technical indicator that analysts are focusing on as support. The CBOE Market Volatility Index, known as the Wall Street Fear Index, rose for the third consecutive session and hit a six-week high of 27.69 points.
noble metal
Gold prices fell on Tuesday, preparing investors for the U.S. and other regions to be in a state of high interest rates for some time. David Meger, head of metals trading at HighRidgeFutures, said: "Fed Chairman Jerome Powell's remarks last week raised expectations that the Fed would be more aggressive, which continues to put pressure on gold. Gold will face more competition as a non-interest asset. ”
At last week's Jackson Hall seminar in Wyoming, both the Fed and the European Central Bank took a hawkish stance, pledging to go all out to curb high inflation even if economic growth takes a hit. Most traders now expect the Fed to raise rates by 75 basis points in September.
Craig Erlam, senior market analyst at OANDA, said in a note: "A return above $1765 may get gold bulls excited again, but judging by the situation over the past few trading days, this may be easier said than implemented." ”
crude
Oil prices plunged nearly $6 on Tuesday, their biggest drop in about a month, amid fears that fuel demand could weaken as global central banks raise interest rates to combat rising inflation, and the turmoil in Iraq has failed to weaken the country's crude exports.
Inflation in many of the world's major economies is close to double digits. This could prompt central banks to raise interest rates more aggressively, slowing economic growth and fuel demand.
According to the American Petroleum Institute (API), U.S. crude inventories increased last week and refined product inventories fell. Crude inventories increased by about 593,000 barrels in the week ended August 26. Gasoline stocks decreased by about 3.4 million barrels and distillate stocks by about 1.7 million barrels.
ECB Governing Council Member Miller said on Tuesday that given particularly high inflation, the ECB should include a 75 basis point hike in discussions at its September policy meeting.
Germany's inflation rose to its highest rate in nearly 50 years in August, surpassing the highs it had only created three months earlier, the data showed. Hungary's central bank raised its benchmark interest rate by 100 basis points to 11.75%.
Bets on another big rate hike by the Fed also boosted the dollar; UBS analyst Giovanni Staunovo said oil prices fell sharply after Iraq's National Oil Marketing Organization (SOMO) commented that the country's oil exports had not been affected by unrest. Investors will be watching for the meeting of OPEC+ of the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, on September 5.
Saudi Arabia raised the possibility of a production cut last week, with sources saying that if Iran reaches a nuclear deal with the West, the cut could coincide with an increase in Iranian supply. U.S. gasoline futures closed at $2.6944 a gallon on Tuesday, the lowest closing price since Feb. 18, when Russia had not yet invaded Ukraine.
foreign exchange
The dollar rose higher on Tuesday but was below a 20-year high set a day ago, while the euro returned above parity as markets priced expectations for the Fed and the European Central Bank's hyperscale rate hikes.
The Fed has been aggressively raising interest rates to curb inflation at decades-highs, all the while the economic data released Tuesday gave the Fed no reason to cower. A report showed an unexpected increase in job openings in the United States in July, while job openings in the previous month were sharply revised upwards, indicating a strong economy, despite two consecutive quarters of declining gross domestic product.
Edward Moya, senior market analyst at Oanda, said, "This is a key component of the labor market that will help the Fed justify aggressive rate hikes, and if Americans have employment options, the Fed can ignore the rapid deterioration of other economic data." "Other data showed a larger-than-expected rebound in August after three consecutive months of decline in U.S. consumer confidence, which could be a positive sign for consumer spending."
About an hour before the release of U.S. economic data on Tuesday, traders raised their bet on the chance of a third consecutive 75 basis point rate hike by the Fed in September from around 66.5 percent to 74.5 percent.
Some traders had bet that the Fed would shift to a more accommodative stance in early 2023, but those expectations were dashed on Friday, when Chairman Powell said at a Jackson Hole meeting in Wyoming that the Fed would raise rates and keep rates high for some time.
Simon Harvey, a Forex market analyst at Monex Europe, said: "After the Jackson Hall meeting, the dust has finally settled, and the question for the market is, what will change the market theme? One way of saying that is Friday's employment data, so we see some consolidation in the market after last week's volatility. ”
All eyes are on Friday's U.S. August non-farm payrolls data, as any cooling in labor demand would ease pressure on the Fed to insist on sharp rate hikes.
The euro rose 0.28% at $1.00245, recovering above its parity with the dollar. Germany's inflation rose to its highest level in nearly 50 years in August, surpassing a high set just three months ago, reinforcing the EUROPEAN CENTRAL's rationale for a deeper rate hike next month, the data showed.
John Hardy, head of foreign exchange strategy at SaxoBank in Denmark, said positive pricing of the ECB's interest rate hike expectations over the past few trading days, as well as weaker gas prices, have contributed to the rise in the euro.
Wholesale gas prices in the UK and the Netherlands retreated on Tuesday as Europe nearly hit the target of 80 percent of gas stocks at full reserves. The pound fell 0.38 percent to $1.16615 after the End of the British bank holiday on Monday. The dollar,000,05% higher against interest rate-sensitive yen at 138.640.
Market Highlights
ECB Regulator Vasle: Supports a rate hike that could exceed 50 basis points.
Russia cuts gas supplies to France
Gazprom (GAZ) will cut its gas supply to the French Angie Group on the grounds that there is a contract dispute between the two sides. The Ongi Group did not elaborate on the nature of the contract dispute with Gazprom. An Ongi spokesman said Russia originally supplied 17 percent of Ongie's imports, a share that fell to less than 4 percent after the Ukraine crisis escalated in February. Ongie Group holds a 9% stake in the Nord Stream-1 pipeline. (Xinhua News Agency)
Spain's average monthly electricity price in August was the highest on record
According to the electricity price data released by the Iberian energy market operator on August 30 local time, the price of electricity in Spain on August 31 will reach 476.39 euros per megawatt hour, which is second only to the electricity price of 545 euros per megawatt hour recorded on March 8 this year, and the second highest single-day electricity price recorded in Spain. According to statistics, the average electricity price in Spain reached 307.8 euros per MWh in August 2022, which is the highest average monthly electricity price recorded in the country. (CCTV News)
Borrell: The Conference of Defense Ministers of the EU Member States agreed to jointly provide military training for Ukraine
On August 30, local time, EU High Representative for Foreign Affairs and Security Policy Borrelli said in Prague, the Czech capital of the EU presidency, that the meeting of defense ministers of EU member states held on the same day had agreed to establish a military assistance mechanism to jointly train Ukrainians to use Western weapons and equipment provided by the EU. Borelli said some EU member states are already providing training for Ukrainians, but there needs to be a coordinated programme at eu level. (CCTV News)
The mainland's first cross-sea high-speed railway will be laid through the whole line, and Fuzhou and Xiamen will achieve a "one-hour living circle"
On the morning of August 30, with the successful laying of the last set of 500-meter-long steel rails at the Xiamen North Railway Station of the Fuzhou-Xiamen High-speed Railway, the first cross-sea high-speed railway in the mainland, the Fuzhou-Xiamen high-speed railway, was laid through the entire line. Fuzhou-Xiamen high-speed railway is an important part of the coastal passage in the mainland's "eight vertical and eight horizontal" high-speed railway engineering network, with a design speed of 350 kilometers per hour and a total length of 277.42 kilometers on the main line, which has successively crossed the three bays of Meizhou Bay, Quanzhou Bay and An Bay, and has a total of 8 stations on the whole line. After the completion and opening of the railway, Fuzhou and Xiamen will realize the "one-hour living circle". (CCTV Finance)
Ministry of Finance: Ukraine received a record $4.6 billion in aid in August
Ukrainian media reported on August 30 local time that Ukrainian Finance Minister Marchenko said that Ukraine received $4.6 billion in aid in August, the highest monthly record since February 24. He also said he expected to receive $1.5 billion in aid from the United States in September, in addition to macro financial assistance from the European Union in September and early October. From Feb. 24 to the end of the year, Ukraine is expected to receive about $30 billion in aid, of which nearly $17 billion has already been received, Marchenko said. (CCTV News)
Gazprom: Nord Stream pipeline overhaul will begin at 4 a.m. Moscow time on August 31
According to Gazprom data, the nord stream pipeline overhaul will begin at 4 a.m. Moscow time on August 31, and the overhaul is expected to end at 4 a.m. on September 3. According to real-time information displayed on the operator's website, the flow of natural gas scheduled to be transported through the Nord Stream pipeline was cleared from 3 a.m. Moscow time on August 31. (CCTV News)
A large Russian trade delegation will visit Iran
The Tehran Times quoted official sources as saying that a large Russian trade delegation will visit Tehran from September 19 to 22 this year. The Russian delegation will include 125 people from 78 Russian companies who will hold talks with the Iranian side. The company's areas include agriculture, meat, dairy products, sweet products, edible oils and fats, aquaculture, as well as production equipment, packaging, pharmaceuticals and health products, building materials, glass and crystal, wood, automotive parts and other industries. The delegation will also include business personnel in the fields of mineral exploration and exploitation, communications, energy, advertising and digital marketing, and education. Russia and Iran have previously taken a series of de-dollarization measures in bilateral trade.
Russia will extend soybean export taxes and ban the export of some rapeseed
According to foreign media reports, Russia's Economy Ministry said on Tuesday that Russia will extend the soybean export tax by two years until August 31, 2024, and extend the export ban on some rapeseeds by six months to February 1, 2023. Rapeseed will only be allowed from the post-Baikalsk region, which borders China. At present, the Export Tax on Russian Soybeans is 20%, but not less than $100 / ton, a move to stimulate investment in domestic soybean processing.
Russian Prime Minister: The proportion of rubles in international settlements should be increased and the currencies of non-friendly countries should be gradually abandoned
According to TASS news agency reported on August 30, Russian Prime Minister Mishustin said at a government meeting on financial work on the same day that it is necessary to increase the proportion of rubles in international settlements and gradually abandon the use of non-friendly countries' currencies. At the same time, Mishustin called for the improvement of the Russian financial system at the meeting. (CCTV News)
This article originated from Huitong Network